One New CANSLIM Long Position, One New Speculative CANSLIM Long Position, And Four Stocks I Am Adding To My Existing Long Positions

August 29, 2007

Once again, the best, are ROS and FALC. MCRS makes a great long only because it is a CANSLIM quality stock. But it still has a lot of risk in it for new investors. The better choices continue to be ROS and FALC. Because, if they work they should produce some strong gains. If they fail, we will not lose much money at all with the cut loss area so close to the purchase point.

new CANSLIM long position: MCRS

MCRS is bouncing right off the 50 day moving average and breaking out to new all-time highs, on very strong volume. This chart is very nice with its constant stair-step pattern higher since the August breakout. The accumulation has been very solid during that time and BOP has remained around the neutral to green area almost the entire time. The other great attributes on this chart is the RS line and moneystream line hitting new highs, confirming the stocks strength. This chart would be so much better if there was green BOP the whole way off the June move and the stock was less choppy before this breakout. However, that can be blamed on the market. The fundamentals are very strong, with EPS growing between 23% and 36% the past eight quarters, sales growing between 12% and 17% the past eight quarters, a ROE of 19%, cash flow of $2.26 a share, 0% debt to shareholder equity, and YOY earnings estimates for 2008 are for a gain of 17%. Fund ownership has increased from 146 funds to 159 funds the past eight quarters, confirming that the smart money is interested. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

new speculative CANSLIM long position: SLP

SLP is bouncing right off the 50 day moving average and breaking out above the July and August resistance, on very strong volume. This chart is very pretty going back to October of 2006, as it has been in a steady uptrend, filled with accumulation and green BOP the entire way. The wonderful support at the 200 day moving average and the excellent shape of this current cup pattern (April to now) makes this chart even that much nicer. Even though it was good to see BOP jump up to the green again, the RS and moneystream line are not as close to the old highs as price. That shows a lack of overall relative strength, compared to the market. The fundamentals are very very strong but coming from low numbers, with EPS growing between 80% and 200% the past six quarters, sales growing between 26% and 71% the past six quarters, a ROE of 13%, cash flow of $0.14 a share, 0% debt to shareholder equity, and YOY earnings estimates for 07 and 08 for gains of 188% and 39% respectively. Fund ownership has gone from 4 funds to 7 funds the last four quarters, showing the smart money is interested in this story. However, despite this very nice chart with strong fundamentals, the average daily volume is below 70k a day and the stock has a natural potential 20% risk if it pullsback to the 50 day moving average, Therefore, new investors should avoid this stock and/or invest only a little bit of their account in it. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

adding to existing CANSLIM/speculative CANSLIM long positions: ROS FALC

ROS is breaking out of a series of ascending base patterns, on very strong volume. This stock has really picked up steam since the beginning of 2006 but starting in 2007 it has started building a series of ascending bases. The move into new high grounds (technically the old highs are in Aprilâ€“but that is splitting hairs) this time is accompanied by a heavy surge in volume. That came along with an excellent bullish intraday reversal, that created an engulfing candlestick chart pattern, on HUGE volume just seven days ago. This stock is really nice with the green BOP that started on the day of the great reversal. Since then the BOP has stayed green has ticked higher on Fridayâ€™s breakout. The chart would be a lot nicer if the BOP was green before the surge and the surge then would have sent BOP to max green. However, we have to take what we can take in this market. The other excellent positive for this chart is that the RS line well outpaced the price of the stock to new highs in mid-August. This stock is clearly showing strength in a weak market. The fundamentals are very strong, with EPS growing between 11% and 91% the past three quarters, sales growing between 7% and 59% the past eight quarters, a ROE of 25%, cash flow of $4.82 a share, only 14% debt to shareholder equity, and YOY earnings estimates for 2008 for a gain of 36%. However, fund ownership has fallen from 10 funds to 9 the past four quarters, so obviously the smart money is not as interested as it appears the stock may warrant. So the low fund ownership and lack of green to max green BOP with heavy accumulation will prevent me from getting too excited about this one. But this is still a nice chart. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

FALC is bouncing right off the 50 day moving average and starting to breakout above the 1234 pullback pattern, on above average volume. This is one of the prettier stocks out there with all that green to max green BOP and accumulation from January to May and all the green to max green BOP from early August. The way the price held the 200 day moving average and put in a great reversal in the middle of August also helps the chart look that much more impressive. It would be nice if there was more volume on today’s move and the RS line was higher, but in this market I will take what I can get. The fundamentals are strong, with EPS growing between 100% and 233% the past five quarters, sales growing between 10% and 77% the past eight quarters, a ROE of 12%, cash flow of $0.20 a share, 0% debt to shareholder equity, and YOY earnings estimates for 2007 and 2008 for gains of 142% and 45% respectively. Fund ownership has grown from 32 funds to 54 funds the past four quarters and management still owns 24% of the shares outstanding, showing that the smart money and insiders have a well funded interest in this story. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

adding to existing speculative long positions: FLT PRAI

FLT is bouncing off the 50 day moving average and breaking out above the August resistance, on below average volume. This stock for me is really a combination of the past two days as the bounce and volume occurred yesterday and the move higher occurred today. This chart has only recently started to look nice after the uptrend in July came with green BOP. That has led to the current base that is filled with max green BOP and strong accumulation with a moneystream line hitting new highs. If this base continues to build the right side on max green BOP, this could turn out to be a great small low-priced stock. The fundamentals are horrible, with EPS bleeding red forever, sales slowing between 50% and 80% the past four quarters, and losses as far as the eye can see. Therefore, this stock is a horrible long for anybody that is looking for anything more than a small trade. The low average daily volume, the low price of the stock, and the horrible fundamentals are just too many negatives to be worth any significant portion of ANYONES portfolio. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately. LIMIT ORDERS ONLY.

PRAI is breaking out above the recent resistance (it appears to be a short cup with handle pattern) and putting in a very bullish intraday reversal, on below average volume. This chart has been very nice since the February reversal, with very strong intraday action, quiet basing periods, strong accumulation, and sporadic periods of green BOP with BOP going max green before the bounce and staying max green after todayâ€™s bounce. This stock is not perfect by any means as the weekly chart can clearly show the very extreme V shape of the move off the February lows and the RS line is much further away from new highs compared to price (negative divergence). The fundamentals are mixed, with EPS slowing the past two quarters, sales growing between 8% and 30% the past four quarters, a ROE of 14%, a cash flow of $1.79 a share, only 10% debt to shareholder equity, and YOY earnings estimates for 2008 for a gain of 39%. Fund ownership has fallen from 55 to 43 funds the past four quarters, showing that the smart money is losing interest in the story. Keep this one small, if you must take it, due to the mixed fundamentals. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.